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On July 18, Jiang Chengjun delivered a speech at the "Integrity Culture Exhibition" of Haitong Securities. Image source: Party Building of Haitong Securities

Author | Wen Shijun

Editor | Wang Weikai

Produced by | Prism·Tencent Xiaoman Studio

On July 31, Haitong Securities issued an announcement stating that Deputy General Manager Jiang Chengjun "applied to resign from the company due to personal reasons" and would no longer hold any position in the company after his resignation.

Unlike previous executive resignation announcements issued by Haitong Securities, this announcement is simple in wording and does not include the usual lengthy tributes to outgoing executives.

More than 10 days ago, on July 18, Jiang Chengjun delivered a speech at the "Integrity Culture Exhibition" held by Haitong Securities, saying that "honest practice is a vital professional ethics requirement in the securities industry."

On August 1, the Economic Observer reported that Jiang Chengjun was taken away by the Commission for Discipline Inspection and Supervision as early as last week. At the latest on July 30, Haitong Securities discovered that it could no longer contact Jiang Chengjun. In addition to Jiang Chengjun, some department heads of Haitong Securities are cooperating with the investigation.

Promoted to deputy general manager in 2023

In 2023, affected by factors such as the delisting of overseas entity Haitong International (0665.HK, Haitong International Securities Group Co., Ltd.) from the Hong Kong stock market, Haitong Securities suffered a net loss of 311 million yuan.

This is the first time that this old Shanghai brokerage firm has recorded a net loss since entering this century. If calculated on the basis of attributable to the parent company's shareholders, Haitong Securities' net profit attributable to the parent company after deducting non-recurring items for the whole year of 2023 is a positive value, but the figure of 270 million yuan is still the lowest since its IPO in 2007.

In 2021, Haitong Securities' net profit was as high as 13.7 billion yuan, and its net profit attributable to shareholders after deducting non-recurring items was still 12.4 billion yuan. By 2023, its performance was less than a fraction of that year.

What does it mean that the profit has dropped by tens of billions in two years? You know, according to the 2023 financial report data,CICCPlusShenwan HongyuanThe total net profit attributable to shareholders of the two brokerage firms, excluding non-recurring items, is only 10.6 billion yuan.

Along with the performance storm, in 2023, Haitong Securities' former deputy general manager Ren Peng, former general manager assistant Lin Yong, former chief risk officer Li Jianguo, and former deputy general manager and compliance director Li Haichao left successively. At the same time, many cadres were promoted, basically all of them were "old Haitong".

Three veterans were promoted to deputy general managers in charge of core businesses, including former general manager assistant and former board secretary Jiang Chengjun, former general manager assistant Pan Guangtao and current financial director Zhang Xinjun. All three have worked at Haitong Securities for more than 20 years, growing up in investment banking, proprietary trading and finance. Jiang Chengjun was already the deputy general manager of the investment banking department of Haitong Securities in August 2000.

It is worth mentioning that Jiang Chengjun's position as board secretary was taken over by the outgoing deputy general manager Pei Changjiang. Pei Changjiang presided over the performance briefing on April 12. Pei Changjiang was born in 1965 and served as the first general manager of Huabao Xingye Fund in 2003. He was the "first generation" head of public funds. This exchange with Jiang Chengjun was to make room for one of the "one general manager and three deputy general managers".

In January 2024, Pei Changjiang resigned as chairman of Haitong Asset Management (Shanghai Haitong Securities Asset Management Co., Ltd.). But as of now, he is still a director of Wells Fargo Fund (Haitong Securities is the largest shareholder).ChangheLegal representative.

The person who took over as chief risk officer is Shi Xu, head of the audit department of Haitong Securities. He joined Haitong Securities in 1999 and gradually grew from an employee to the general manager of the department.

The new compliance director Zhao Huiwen has a background in supervision. He has served as a cadre, deputy director, director of the Inspection Bureau of the China Securities Regulatory Commission, director of the Issuance Supervision Department, and director of the Securities and Fund Institutions Supervision Department. Before joining Haitong Securities, he served asDongxing SecuritiesDeputy General Manager, Chief Risk Officer, and Compliance Director.

Pan Guangtao, Zhang Xinjun, Shi Xu, and Zhao Huiwen were all born in the 1970s. Even though most of them are over 50 years old, their appointments are considered by the market as a reform move to younger cadres at Haitong Securities.

Of course, the salaries of these professional cadres in 2023 are all in the million level: Jiang Chengjun 1.9774 million yuan (with an additional deferred salary of 1.4027 million yuan), Pan Guangtao 1.9726 million yuan (with an additional deferred salary of 1.2615 million yuan), Zhang Xinjun 1.8551 million yuan (with an additional deferred salary of 1.2652 million yuan), Shi Xu 1.1518 million yuan (with an additional deferred salary of 406,700 yuan), and Zhao Huiwen 956,300 yuan.

Zhao Huiwen is the only one among them whose salary is less than one million, but he officially took up the position of compliance director at the end of July 2023, and his annual salary is already much higher than his predecessor Li Haichao (who also has a background in the CSRC) in 2022, when he made 792,000 yuan.

The huge personnel changes have verified a common rule: when the company's performance fluctuates, it is often the time for personnel layout - the resistance to change is smaller. At this time, technical cadres cannot offer performance bargaining chips, "old employees" are likely to want to retire, and management can also use "reform" as a reason to promote new people.

The risk appetite of IPO business is relatively high, and the regulator once named Jiang Chengjun

Investment banking is an area of ​​strength for Haitong Securities. In particular, the IPO business performed well in 2023. In terms of the amount of funds raised, Haitong Securities underwrote 22 A-share IPOs that year, with a cumulative scale of 46.615 billion yuan. This is the second best result in the entire market, although not as good asCITIC Securities50.033 billion yuan, but lower than the thirdCITIC Construction InvestmentThe 39.402 billion yuan is also much higher.

The advantages of IPOs on the Science and Technology Innovation Board are more prominent. Of the 22 A-share IPOs completed by Haitong Securities in 2023, 10 were listed on the Science and Technology Innovation Board, with a total fundraising of 37.97 billion yuan, ranking first in the entire market, 16.461 billion yuan more than the second-ranked CICC.

But such performance also comes at a price. Another aspect of its Sci-Tech Innovation Board business advantage is Haitong Securities' relatively high risk appetite in the field of investment banking business, and its boldness in doing things. This can bring higher returns and more projects, but it has also touched the regulatory red line many times.

The Shanghai Stock Exchange alone issued two regulatory letters to Haitong Securities in June 2023 and January 2024. The regulatory letter in June 2023 clearly stated that Haitong Securities’ three projects, Huiqiang New Materials, Mingfeng Medical, and Zhizhen Shares, did not perform their duties in the sponsorship and verification work.

The regulatory letter in January 2024 directly named Jiang Chengjun, a core figure in Haitong Securities' investment bank, and the two heads of internal review and quality control at Haitong Securities. Not only did it give the above three people a regulatory warning, it also explicitly required that "the main person in charge of Haitong Securities bring a valid ID to the exchange for a regulatory interview."

Insurance agents are frequently named. In January 2024 alone, four insurance agents of Haitong Securities, Chen Cheng, Jing Yang, Yan Ying and Xie Dan, were criticized by the Shenzhen and Shanghai Stock Exchanges. In the environment of "toothy and thorny" supervision, it is more difficult for investment banking business to grow. But the greater pressure comes from the reduction in the number of IPOs.

After the "827 New Policy" in 2023, "reasonably grasping the rhythm of IPO and refinancing" and "phased tightening of IPO rhythm" became the mainstream. At the beginning of 2024, the regulator "urgently" investigated the fees of securities companies' IPO underwriting and sponsorship projects, and the discussion of investment banks' fee reduction was even more rampant. Before the Spring Festival, the China Securities Regulatory Commission "changed its leadership", and the overall IPO market in 2024 was tightened.

This time, with the departure of Jiang Chengjun, a core figure in the investment bank, Haitong Securities may usher in a rebirth.